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By Balazs Koranyi and Geert De Clercq
OSLO/PARIS, May 14 (Reuters) - Norway's Siem Shipping Inc has withdrawn its bid for French group SNCM, in a blow to environmental services group Veolia which has been trying for years to sell the loss-making operator of ferries between France and Corsica.
Last month, transport firm Transdev, which is jointly owned by Veolia and state-backed Caisse des Depots (CDC), said it was in talks with Siem about the sale of its 66 percent SNCM stake.
"It is a fact that the process has been very lengthy and somewhat unclear, and with the situation that now prevails, it's probably better we call it off," Kristian Siem, founder, director and chairman of Siem Industries - the owner of Siem Shipping - told Reuters.
"We have informed the individuals involved of this."
Siem's withdrawal follows Monday's ousting of SNCM chief Marc Dufour, who had ignored instructions from shareholders and sided with the unions to support a restructuring plan which Transdev did not deem credible.
Siem was the only bidder for SNCM, which Transdev has been trying sell for years. The French state also has a direct SNCM stake of 25 percent and its employees own 9 percent.
Weighed down by more than a decade of losses and with an EU order to repay 440 million euros of illegal state aid hanging over it, SNCM was kept afloat with 30 million euros in state financing in the past few months after Transdev said it would put no new money in the ferry operator.
The European Commission has ordered France to recover 440 million euros ($607 million) in state aid from SNCM, which also runs ferries between France and North Africa. France is appealing against the ruling.
Veolia CEO Antoine Frerot has said finding a viable solution for SNCM would mean putting the latter under court protection to shield it from the aid repayment claim.
A solution for SNCM is crucial for Veolia, as it is a precondition for its plan to sell part of its Transdev stake to CDC, as CDC does not want to take over Transdev with SNCM. (Editing by David Holmes)